STUDIES IN SECURITIES 
added to road and equipment and $32,000,000 to investments. Cap- 
ital structure now is $326,542,000 funded debt, of which $65,000,- 
000 at 4% and $43,000,000 at 5% matures 1929 to 1933, $71,800,- 
000 5% preferred stock, carrying 45% dividend accrual July 1 
this year, and $82,840,000 common stock. 
Earnings of Missouri Pacific on its shares, figuring the balance for 
the common with only regular preferred dividend requirement 
deducted, have been as follows: 
1926 1925 1924 
Preferred .........»..312.00 $10.60 $9.10 
ITO. ee oe os DSTO 4.90 3.50 
Including the due proportions of surplus income of subsidiaries, 
the ‘Denver’ being excluded, these earnings become as follows : 
1926 1925 1924 
Preferred ......:..... 314.95 $13.50 $12.60 
COMMON 0. ives 5.05 7.40 6.60 
Were the preferred dividend arrears of $32,310,000 funded at 6%, 
the common share earnings would be reduced $2.35, but a liquida- 
tion of the accrual other than by cash payment seems unlikely. 
With gross revenues of Missouri Pacific above $130,000,000 annu- 
ally and of the system $200,000,000, a reduction of 1% in operating 
expense ratio adds $1.60 to direct common share earnings and 
$2.40 on a system basis. Actually the ratio was 76.8% in 1926, 
18.2% in 1925, and 79.6% in 1924, for Missouri Pacifie proper, 
comparative with 68% in 1917, and for the system 76.0% in 
1926 and 76.8% in 1925. Maintenance has been high relatively. 
Refunding of debt early in 1927, not only by sale of $95,000,000 
5% bonds at par showed the good standing of Missouri Pacific as a 
road not yet in the dividend class, but also coupled with a lesser 
piece of refinancing late in 1926 brought about $800,000 or $1 a 
share annual interest savings. 
Weighing the probabilities it may be concluded that earning capac- 
ity even from present traffic is subject to further increase, while 
current results seem to justify dividends, and the stocks, preferred 
being convertible into common at par, are worth holding for specu- 
lation. 
Montgomery Ward & Co. 
For each of its 1,141,251 common shares Montgomery Ward & 
Co. does approximately $160 annual business and the $4 dividend 
now paid is 214% of it. In addition 1% of sales is taken for fixed 
$7 dividends on 205,000 shares of class A stock and for interest 
[51]